Adjusting cycle inventory and safety stock level at Ethicon, a Johnson & Johnson franchise.

Details

Supervisors

Chevalier, Philippe

Faculty

Louvain School of Management

Degree label

Master [120] en Ingénieur de gestion

Abstract

Since the end of the 20th century, economic woes and worldwide change in regulatory landscape have considerably shifted the way medical devices are purchased, creating a new model in which improvements in supply chain turned out to be strategic. Production is getting more and more complex; demand for affordable and effective healthcare is growing in emerging countries; quality and compliance issues are also on the rise. Inventory management in a broad sense has rapidly become crucial when finding the right balance between cost performance and responsiveness to customers. In this context, the needles and sutures producer Ethicon decided to launch the Vantage project a few years ago. One of the main objectives of this project is to reduce the total production cost by implementing the well-known Economic Order Quantity model. In order to mitigate the significant cost incurred when replenishing inventories, the company decided to invest in extra holding capacity and to revise the quantities to produce. The work presented in this master thesis has been initiated to help managers compute the optimal batch sizes regarding the budget constraint and to analyse the effect of the batch optimization program on the safety stock level.